Are automobile safety regulations worth the price: Evidence from used car markets

Abstract

The value consumers place on automobile safety regulations can be determined by examining the instantaneous effects changes in these regulations have on used vehicle prices. If consumers value safety regulations more than their cost, used vehicle prices decrease in response to a change in safety regulations. If consumers place at least some value on the safety induced by safety regulations, a change in emission control regulations will have a greater positive impact on used automobile prices than a change in safety regulations. Empirical results strongly support the latter case and, surprisingly, offer some support for the former case. (JEL L51, L62).